Coronavirus pandemic reshapes Bay Area shopping habits

2020-04-26

The coronavirus pandemic wrought dramatic changes in where Bay Area consumers spend their money.

Not surprisingly, services delivering food — groceries, prepared meals and DIY meal kits — saw volumes spike once everyone was ordered to shelter at home. What is surprising is how much one player dominated growth and market share in each of those categories.

On the other hand, Uber and Lyft saw usage nosedive, with local ride sales at both down about 90% compared with a year earlier.

Meanwhile, mainstay stores for staples, Amazon and Costco, also had surging volumes — but not necessarily when you would think.

To delve into spending, The Chronicle looked at data from Second Measure, a San Francisco company that analyzes billions of anonymized credit card purchases to track consumer behavior and sales at individual merchants. We examined weekly spending in six categories heavily impacted by the pandemic and shelter-in-place order.

The charts display data for the San Francisco metro region of San Francisco, San Mateo, Alameda, Contra Costa and Marin counties. Second Measure’s national data showed similar trends. Data are indexed to equal 100 across an entire category of as January 2018.

Grocery delivery: Instacart has had an astounding run-up, with its San Francisco metro sales volume for late March about five times what it was in mid-February. Meanwhile, Amazon Fresh, which includes deliveries from Whole Foods Market and Amazon Fresh (Amazon Prime’s grocery delivery service) lagged.

Amazon’s issues were highlighted during the pandemic when it limited Whole Foods and Amazon Fresh deliveries to existing customers. Amazon said that social distancing and other safety measures combined with unprecedented demand were factors. It said it is hiring and adjusting operations to increase capacity and will add new grocery delivery customers from a wait list.

“Instacart has had better speed of delivery — their wait times and ability to get a slot are better than some other players,” said Sucharita Kodali, vice president and principal analyst at Forrester Research, speaking of the national landscape. Still Instacart’s one-hour and same-day delivery disappeared in the deluge with customers on social media complaining about erratic availability.

Instacart said it will hire 250,000 full-service shoppers — the independent contractors who select and deliver groceries — to try to regain same-day speeds. That’s on top of 300,000 it’s added in the past month, which brought its freelance workforce to 500,000.

Meal delivery: DoorDash dominates this category, both nationally (44% of the market as of March 30) and even more so locally (62%).

For all players, restaurant delivery was flat until mid-March, but took off as soon as shelter in place was implemented. DoorDash’s San Francisco sales are now 120% of what they were a year ago, while those at Uber Eats are up 49%. GrubHub saw a year-over-year increase of 22%, while Postmates’ increase was a muted 10%.

Average per-customer spending also rose about 26% at DoorDash, 21% at Grubhub, 23% at Postmates and 35% at UberEats.

Meal kits: Combining cooking and eating, two favorite shelter-in-place activities, meal kits are having a moment. HelloFresh is the standout, with 39% of the local market and 56% nationwide as of March 30.

The Berlin company said it is the largest meal kit company globally, and has been No. 1 for several years in multiple European countries and the U.S.

HelloFresh said it was well prepared for the demand surge. “We are working around the clock to deliver our boxes and collaborating with our network of suppliers and partners to ensure we continue delivering fresh and reliable meals to our customers,” it said.

Ride hailing: Uber and Lyft ridership sagged in the first two weeks of March as people were beginning to hunker down, and then plunged dramatically starting the week of March 16, when most of the Bay Area implemented mandatory sheltering in place. Their sales here fell 90% compared with the same time last year. Nationwide, they were down about 85% for Uber and 89% for Lyft.

Drivers say their income has plummeted as well. Both companies are trying to help drivers find other opportunities with the booming delivery services and by subsidizing some rides and deliveries related to pandemic relief to provide some earning opportunities.

One twist: The few remaining customers were still spending about $40 a week each, close to typical averages pre-pandemic. That could be because essential workers are relying on ride-hailing rather than risking public transportation.

Uber and Lyft did not immediately reply to requests for comment.

Amazon.com: Hunkered down at home, consumers shopped online for everything from the top staple, toilet paper, to toys and puzzles to keep themselves and their kids occupied. For the world’s top online retailer, that should have been great news.

“Amazon was handed a winning lottery ticket,” Kodali said.

Yet it appears Amazon has struggled. The Seattle company said it is hiring 175,000 workers and prioritizing essential items, so shipments of many other items were significantly delayed.

Amazon’s sales volume during the weeks of March 16, 23 and 30 was well short of what it handled during the first three weeks of December 2019. The March weeks together totaled 23.5% less than the three holiday weeks.

“It’s very strange,” Kodali said. “If they weren’t near holiday volumes, why were they turning down transactions?”

Amazon said that social distancing, extensive cleaning and supporting employees who chose not to work made a comparison to previous time periods flawed. It said it is continually improving logistics, transportation, supply chain, purchasing and other processes. It is investing $500 million in a temporary $2/hour pay raise for hourly workers in the U.S., Europe and Canada.

“We will continue to make regular, critical updates to our processes to ensure we are keeping our employees safe while providing a vital service to people everywhere,” Amazon said in a statement. “We know that people are depending on us.”

Costco: People flocked to Costco to buy essentials in bulk. But they did that before shelter in place was implemented. Costco’s local sales for the week of March 30 were slightly below normal.

“The Costco numbers were about stockpiling and panic buying,” Kodali said. “We saw the same trend reflected with drugstores. Once you’ve stockpiled, you don’t need more stuff, so it’s much softer in subsequent weeks.”

Experienced supply chain leader with proven accomplishments developing and executing complex strategies for multiple category groups. Highly successful at leading through change and during times of ambiguity. Well balanced academic and work experience spans business, supply chain, and finance.